Pinnell/Busch: Project Management Consultants for the Design & Construction Industry

The Associated General Contractors of America
Construction News Update - July 2006
By Steven Pinnell and Sarah Pagliasotti Newman

In 2005, Pinnell/Busch surveyed construction industry practitioners (or their experiences and recommendations regarding changes, delays, and claims, and how to avoid them. The results indicate changes account for an average of 10% of project costs. Yet for some owners it accounts for only 2% to 3%, while for others it accounts for 15% or more. Clearly some organizations do a better job of managing change than others. But regardless of how your organization is doing now, by implementing some essential scheduling best practices you can improve your processes and outcomes.

Causes of Changes
According to contractor responses; scope changes, design errors, and differing site conditions – in that order – are the three primary causes of change. To reduce changes, Pinnell/Busch has developed the following recommended best practices:

Scope Change
1. Define scope accurately during programming and pre-design
2. Manage cost and scope during design
3. Involve user groups and operations and maintenance in design reviews

Design Errors
1. Select the best-qualified designer with project management skills
2. Don't over-emphasize design fees-pay more, get more
3. Evaluate performance and use for future selection
4. Utilize constructability reviews and value engineering

Differing Site Conditions
1. Ensure accurate as-builts of new projects
2. Perform risk analysis of site investigation cost vs. benefits

Claims
While there is a wide variance in the percentage of changes that turn into claims, the strong correlation between increased changes and increased claims is clear. This is another reason for owners and designers to minimize changes during construction.

Delays
Changes also increase the likelihood of delays. More than half of all projects are delayed, and the causes of delays mirror the causes of changes. So the best practices for avoiding delays are those for avoiding changes, plus:
1. Training in critical path scheduling
2. Owners writing better scheduling specifications
3. Contractors preparing better schedules
4. Owner representatives enforcing schedule specifications and tracking progress more closely

Items two and three above are perhaps the most vexing – how do owners write better scheduling specifications and how do contractors prepare better schedules? For owners, Pinnell/Busch has created a draft schedule specification that we recommend as a first step in avoiding some of these common scheduling problems. For example, it requires a narrative description be included, with every update, every month. That kind of detail is often overlooked but can make a big difference in managing a project and in avoiding delays and claims.

Scheduling
Helping contractors prepare better schedules is perhaps a bigger job. Our survey revealed that scheduling performance by all parties – owners, contractors, and owner representatives – was appalling. But contractors, in particular, aren't necessarily making the connection between poor scheduling performance and delays: three-fourths of those surveyed, including many of those with frequent and/or severe delays, are satisfied with their scheduling practices.

Owners think less highly of contractor scheduling, reporting that only one-third of their contractors are good schedulers, one-third are merely fair, and one-third are poor. Subcontractors also had a dim view of general contractors’ scheduling practices, closely matching the owner perspective. Too few general contractors, they say, request subcontractor input, prepare monthly updates, keep subs informed, or prepare recovery schedules when delayed. Even worse, most hide delays and employ trade stacking.

Pinnell/Busch Vice President, Senior Scheduler and Construction Manager Blake Marchand says those findings match his own assessment of common contractor scheduling mistakes.

“Contractors most typically do three things that undermine a project's schedule,” Marchand says, “First, they don't show or use float. Second, they don't establish a critical path, and third, they don't provide regular schedule updates to themselves, the owner, or the subcontractors, which means they aren't using their schedules to reflect current conditions.”

An underutilized schedule is a lost opportunity, Marchand says. And one of the biggest reasons for it is poor initial planning. For a schedule to be truly effective, all parties need to be able to understand it and work with it. For example, Pinnell/Busch worked on a $65 million, three building hotel/condominium project in Mammoth Lakes, Nevada, in 2006, for which the general contractor needed a simplified baseline. The existing schedule was so detailed and fragmented that subcontractors were unable to comply with it.

“I frequently help contractors set up a schedule they can use and that all the other parties can adhere to,” says Marchand. “We focus on creating schedules that have reasonable durations and logical relationships – it’s something that everyone can buy into, which is extremely important.”

Bottom line: Focus on Quality Scheduling
Given all of that, it is safe to say that most contractors could probably stand to fine-tune their scheduling practices. In part, that means training staff on project management. It also means heeding the best practices recommended above, plus:
1. Using partnering to establish a project – first approach with both contractors and owners
2. Creating achievable schedules with realistic lead times
3. Keeping accurate records and increasing staffing on troubled projects
4. Resolving disputes with win/win negotiation and mediation
5. Training for both owners and contractors in contract law and scheduling
6. Timely submittal of and response to notices of change and change order proposals

For more on improving scheduling, visit www.pinnellbusch.com/library/ or contact us at the 503-293-6280.

We refined our original survey, and collected more data in 2006 to compare with the results. Steve Pinnell presented these results at the Association for the Advancement of Cost Engineers International (AACEI) annual conference in Las Vegas in June of 2006. That presentation can also be accessed at www.pinnellbusch.com.